EXHIBIT 4.07
Certificate Number ___
THE KERNEL GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT
The Kernel Group, Inc. ("TKG") and the ("Company") is granting to ________
("Employee") effective _________, 2000, with vesting commencement date of
________, 2000, incentive stock options as detailed in the following agreement.
RECITALS
X. XXX has adopted the 1997 Incentive Equity Plan (the "Plan") in
order that officers, employees and consultants of TKG may acquire a proprietary
interest in TKG on favorable terms.
B. The Administrator of the Plan has selected Employee to
participate in the Plan, and desires to grant to Employee an option to purchase
shares of the Common Stock of TKG.
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt,
adequacy, and sufficiency of which is hereby acknowledge, the parties agree as
follows:
Article I
DEFINITIONS
1.1 Unless the context requires otherwise, all capitalized terms used
in this Agreement and not otherwise defined herein shall have the meaning
assigned to them in the Plan, which definitions are incorporated herein by this
reference for all purposes.
Article II
OPTION
2.1 Option Grant. Subject to the terms and conditions of the Plan and
of this Agreement, TKG hereby grants to the Employee the right and option (the
"Option") to purchase all or any part of an aggregate of ______ shares of the
Common Stock, with par value of $.001, of TKG (the "Option Shares") at a price
of $____ per share which is no less than 100% of the fair market value. This
Option is intended by the parties hereto to be, and shall be treated as, an
incentive stock under Section 422 of the Internal Revenue Code of 1986.
2.2 Vesting and Exercise. The Option Shares shall initially be
unvested. Optionee shall acquire a vested interest in 25% of options after each
12-month period from date of vesting commencement date. The Employee may
exercise vested Options in whole or in part and from time to time during a
period commencing and ending eight years from the effective date of this
Agreement unless it is subject to earlier termination as provided in this
Agreement.
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Certificate Number ___
2.3 Manner of Exercise. The person entitled to exercise the Option
may do so by delivering notice of exercise in a form approved by TKG to TKG at
its principal office. Such notice shall specify the number of shares to be
purchased, the purchase price of each share, and the aggregate purchase price
for all shares being purchased under said notice. Such notice shall be signed by
such person and shall be accompanied by payment in full for such aggregate
purchase price. TKG, in the event of exercise by a person other than the
Employee, may require proof of the right of such person to exercise the Option.
Within 30 days following receipt of the aforementioned notice to
purchase, TKG shall cause to be issued to the person entitled to purchase the
shares subject to option under this Agreement, stock certificates for the number
of shares of TKG's Common Stock, fully paid and non-assessable, specified in
such notice. Until such issuance, the purchaser shall have no rights as a
shareholder of TKG with respect to the unissued shares.
2.4 Transferability. During the Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable except,
in the case of be death of the Employee, by will or the laws of descent and
distribution, nor shall the Option be subject to attachment, execution, or other
similar process. However, the Employee may specifically designate, by will or
otherwise, the beneficiary of the Employee's rights under the Option. In the
event of (a) any attempt by the Employee to alienate, assign, pledge,
hypothecate or otherwise dispose of the Option, except as provided herein, or
(b) the levy of any attachment, execution or similar process upon the rights or
interest hereby conferred, TKG may terminate the Option by notice to the
Employee and it shall thereupon become null and void.
2.5 Earlier Termination.
a. Notwithstanding the provisions of Section 2.2, the Option
vesting will immediately cease upon termination of the
Employee's employment. The Option must be exercised within
30 days from date of termination or options will
terminate.
b. Upon a termination of employment by reason of retirement,
disability or death, vesting will cease and the vested
Option may be exercised during the following periods, but
only to the extent that Option was outstanding and
exercisable on any such date of retirement, Permanent
Disability (defined in the Plan) or death, and the Option
shall terminate and become null and void immediately upon
the expiration of the applicable period: (i) the
twelve-month period following the date of such termination
of the Employee's employment in the case of a Permanent
Disability, (ii) the twelve-month period following the
date of such termination of the Employee's employment in
the case of the Employee's death during his employment by
TKG; and (iii) the three-month period following the date
of such termination in the case of retirement on or after
attainment of age 65, or in the case of disability other
than as described in (i) above. In no event, however,
shall any such period extend beyond the Option Term.
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Certificate Number ___
c. In the event of the death of the Employee, the vested
Option may be exercised by the Employee's legal
representative(s) or by a person who has acquired the
Option through a bequest or inheritance from the Employee,
but only to the extent that the Option would otherwise
have been exercisable by the Employee prior to his or her
death. If the Employee dies during the one-year period
provided in subsection (1) of the first sentence of the
previous paragraph, or during the three-month period
provided in subsection (iii) of the first sentence of the
previous paragraph, then the Employee's legal
representative(s) or by a person who has acquired the
Option through a bequest or inheritance from the Employee
shall have the right, for an additional one-year period
from the date of death, to exercise the Option, but only
to the extent that the Option would otherwise have been
exercisable by the Employee prior to his or her death.
2.6 Transfer of Options Through Termination of Marital Relationship.
As stated in the Plan, in the event that an Option is transferred to the spouse
of an employee upon termination of the marital relationship of the employee, the
Company shall have the right to repurchase the Option from the ex-spouse of the
employee for $0.01 per each share of stock for which the Option may be
exercised. The Company may exercise its right to repurchase options which have
been transferred upon termination of the marital relationship within thirty (30)
days after it receives written notice of termination of such marital
relationship by delivering payment in full of the repurchase price to the
ex-spouse, or any other party to whom the option has been transferred. Upon
delivery of the repurchase price to the holder of an Option which has been
transferred upon termination of a marital relationship, the Option shall expire
and become void. An option which has been transferred upon termination of a
marital relationship shall not be exercisable until the expiration sixty (60)
days after notice of the transfer has been delivered to the Company by the
person to whom the Option has been transferred.
2.7 Adjustment of Optioned Shares. As stated and further elaborated
upon in the Plan, in the event of a stock split, reverse stock split or stock
dividend or issuance of common shares without receipt of consideration, the
number of shares will be proportionally adjusted along with the purchase price.
The Administrator shall make proportionate adjustment whose determination in
that respect shall be final, binding and conclusive.
2.8 Employment Not Affected. The granting of the Option nor its
exercise shall not be construed as granting to the Employee any right with
respect to continuance of employment by TKG. Except as may otherwise be limited
by a written agreement between TKG and the Employee, the right of TKG to
terminate at will the Employee's employment with it at any time (whether by
dismissal, discharge, retirement or otherwise) is specifically reserved by TKG,
as the employer, and acknowledged by the Employee.
2.9 Restriction on Exercise and Resale of Shares. TKG's issuance of
shares of Common Stock upon exercise of the Option is conditioned upon
conformance with all requirements of law, including the Securities Act of 1933
and all other applicable state and federal laws and regulations, and TKG shall
be under no obligation to issue Stock upon exercise of the Option where such
issuance would cause it to be in violation of any such law or
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Certificate Number ___
regulation. As a condition precedent to TKG's transfer to Employee of any shares
of Stock or any shares of Stock upon exercise of the Option, Employee agrees to
the provisions of this Section 2.8, and makes the representations to TKG
contained herein. The Stock will be, and shares of Stock to be issued upon
exercise of Options under the Plan may be, issued and sold without registration
under the Federal Securities Act of 1933 or the securities laws of any state, in
reliance upon certain exemptive provisions of said acts. The shares cannot be
sold or transferred except if, in the opinion of counsel to TKG, such sale or
transfer would be pursuant to an effective registration statement under Federal
Act or pursuant to an exemption from such registration and in a transaction
which is exempt under applicable securities laws, or pursuant to effective
registration statements under such acts, or in a transaction which is otherwise
in compliance with such acts. Each certificate representing shares of Stock
issued upon exercise of an Option (if such Stock is not registered under the
applicable securities laws) shall be stamped with a legend in substantially the
following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or qualified under
applicable state securities laws. They may not be sold, offered for sale,
transferred, pledged or hypothecated in the absence of a registration
statement and/or qualification application, in effect with respect to the
securities under the 1933 act and applicable state securities laws; or an
opinion of counsel or other evidence satisfactory to the company that
such registration and/or qualification is not required."
2.10.1 Change in Control. In the event of a merger of TKG into another
company or a sale of substantially all of the assets of the Company (in excess
of 50% of the assets), a Change in Control has occurred. In the case of a Change
of Control, the following acceleration for vesting will occur, (A) 50% of
unvested options will immediately vest, (B) the balance of unvested shares will
vest at the earlier of the original vesting schedule or 12 months from the date
of the Change of Control, (C) all unvested shares will vest if the stock options
are not assumed or replaced with stock options of equal value and equal vesting
schedule and (D) all options will vest if the employee is terminated or the
employees salary is reduced within 12 months from the date of the Change of
Control. An initial public offering (IPO) by the Company is not considered a
Change of Control.
Article III
MISCELLANEOUS
3.1 Governing Law
This Plan shall be subject to, and governed by, the laws of the State of Texas
irrespective of the fact that one or more of the parties may work in or be a
resident of a different state.
3.2 Severability
In the event any parts of this Agreement are found to be void, the remaining
provisions of this Plan shall nevertheless be binding with the same effect as
though the void parts were deleted.
3.3 Rules of Construction
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Certificate Number ___
Wherever in this Agreement, words including pronouns, are used in the masculine,
they shall be read and construed in the feminine or neuter whenever they would
so apply; and wherever in this Agreement, words, including pronouns, are used in
the singular or plural, they shall be read and construed in the plural or
singular, respectively, wherever they would so apply.
3.4 This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Corporation agrees it
will not be a party to any merger, consolidation or reorganization, unless and
until its obligations hereunder shall be expressly assumed by its successor or
successors.
In witness whereof, the parties hereto have hereunto set their hands the day and
year first above written.
Corporation: Employee:
By: _____________________________ _________________________________
Name
Plan Administrator _________________________________
By: _____________________________
Name
Plan Administrator
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